Correlation Between Frontier Lithium and CanAlaska Uranium

Can any of the company-specific risk be diversified away by investing in both Frontier Lithium and CanAlaska Uranium at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Frontier Lithium and CanAlaska Uranium into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Frontier Lithium and CanAlaska Uranium, you can compare the effects of market volatilities on Frontier Lithium and CanAlaska Uranium and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Frontier Lithium with a short position of CanAlaska Uranium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Frontier Lithium and CanAlaska Uranium.

Diversification Opportunities for Frontier Lithium and CanAlaska Uranium

-0.18

Correlation Coefficient

Frontier Lithium  CanAlaska Uranium

Good diversification

The 3 months correlation between Frontier and CanAlaska is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Frontier Lithium and CanAlaska Uranium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CanAlaska Uranium and Frontier Lithium is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Frontier Lithium are associated (or correlated) with CanAlaska Uranium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CanAlaska Uranium has no effect on the direction of Frontier Lithium i.e., Frontier Lithium and CanAlaska Uranium go up and down completely randomly.

Pair Corralation between Frontier Lithium and CanAlaska Uranium

Assuming the 90 days horizon Frontier Lithium is expected to under-perform the CanAlaska Uranium. But the otc stock apears to be less risky and, when comparing its historical volatility, Frontier Lithium is 1.33 times less risky than CanAlaska Uranium. The otc stock trades about -0.04 of its potential returns per unit of risk. The CanAlaska Uranium is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  54.00  in CanAlaska Uranium on May 7, 2025 and sell it today you would earn a total of  6.00  from holding CanAlaska Uranium or generate 11.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Frontier Lithium  vs.  CanAlaska Uranium

Frontier Lithium

Risk-Adjusted Performance

Very Weak

Over the last 90 days Frontier Lithium has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

CanAlaska Uranium

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CanAlaska Uranium are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CanAlaska Uranium reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Frontier Lithium and CanAlaska Uranium

The main advantage of trading using opposite Frontier Lithium and CanAlaska Uranium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Frontier Lithium position performs unexpectedly, CanAlaska Uranium can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in CanAlaska Uranium will offset losses from the drop in CanAlaska Uranium's long position.

The idea behind Frontier Lithium and CanAlaska Uranium pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.